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1990 DIGILAW 241 (PAT)

R. N. Singh & Brothors v. Bihar State Food and Civil Supplies Corporation

1990-07-25

DHARAMPAL SINHA, SATYESHWAR ROY

body1990
By Court. Heard the counsel for tile parties and in the circumstances of the case we are disposing it at the admission stage. 2. The petitioners in this application have challenged the validity of Annexure 10 the letter dated 23.5.1990 by which the respondent Corporation has rescinded the agreement as contained in Annexure-4 entered into by and between the petitioner no.1-firm and the Corporation. 3. According to the petitioners, in view of the agreement as evidenced by Annexure 4 under which the Corporation had given to petitioner no. 1 right to transport food grains and other Commodities by read within the district of Singhbhum, from singhbhum to other districts and vice versa and from outside the State on the terms and conditions embodied in it, the Corporation could not have rescinded the agreement by letter as contained in Annexure-10. The action of the Corporation was arbitrary being in violation of Article 14 of the Constitution. Further the Corporation was bound by the rule of promissory estoppel. 4. There is no dispute that the agreement entered into by and between the petitioner-firm and tile Corporation as evidenced by Annexure 4 has been rescinded by the letter as contained in Annexure to. According to tile petitioner, the question of arbitrariness will apply not only before the State or its instrumentality entered into an agreement but also during the subsistence of the agreement. Relying on Mahabir Auto Stores Vs. Indian oil Corporation: AIR 1990 Supreme Court 1031 : it was submitted by Mr. Debi prasad on behalf of the petitioners that once the Corporation bad entered into an agreement with the petitioner-firm, the former was bound to allow the petitioner firm to transport rood articles and other things in terms of the agreement for the whole of the period 1.4.1990 to 31.3.1991. It was urged that tile order as contained in Annexure 14 was bad because no opportunity was given to the petitioner-firm before Annexure-10 was issued. 5. On behalf of the respondents, it was submitted that since the agreement was not statutory and as the breach, if at all had taken place during the subsistence of the agreement, the writ petition was not maintainable. Reliance was placed on Radhakrishna Agarwal and others Vs. State of Bihar and others: AIR 1977 Supreme Court 1496: and Bareilly Development Authority Vs. Reliance was placed on Radhakrishna Agarwal and others Vs. State of Bihar and others: AIR 1977 Supreme Court 1496: and Bareilly Development Authority Vs. Ajay pal Singh: AIR 1989 Supreme Court 1076 : where Radha krishna has been relied upon. 6. From the judgment of Mahabir Auto (Supra) it appears that the respondent Indian oil Corporation (for short IOC) had entered into an agreement with Mahabir Auto Stores by which it became distributor of IOC and it was given a permanent customer code. Mahabir Auto was receiving continueous supply of lubricants from IOC. Suddenly IOC stepped the supply of the same. The action of the IOC was challenged by Mahabir Auto Stores. Mr. Debi prasad particularly relied in paragraph-12 (of AIR) of Mahabir Auto wherein the Supreme Court has observed as follows :- "In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a Government action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable." 7. There is no dispute that respondent no.1-Corporation is a State within the meaning of Article 12. The question is whether in the facts of this case, the action of the Corporation is amenable to the writ jurisdiction. The Supreme Court in Mahabir Auto (Supra), in which Radhakrishna (Supra) was noticed, held that action of IOC in stopping the supply of lubricants to Mahabir Auto Stores was arbitrary being in violation of Article 14. This was held by the Supreme Court in the context that IOC had monopoly in supplying lubricants. From the portion of judgment of Mahabir Prasad (Supra) en which Mr. This was held by the Supreme Court in the context that IOC had monopoly in supplying lubricants. From the portion of judgment of Mahabir Prasad (Supra) en which Mr. Debi Prasad has relied and which has been quoted above, it will appear that the Supreme Court had taken notice of the fact that whatever be the activity of the public authority in such monopoly or semi-monopoly dealings, it should meet the test of Article 14. That is not the fact here in this case. In Radhakrishna (Supra), a breach of contract at the hands of the State was challenged on the ground that it violated Article 14. The Supreme Court observed as under : "If we were to accept this very wide proposition every case of a breach of contract by the State or its agents or its officers would call for interference under Article 226 of the Constitution. We do not consider this to be a sound position at all." 8. Neither in Radha Krishna nor in this case, the contract was a statutory contract. It was not entered in exercise of the statutory power or obligation. In this case, the nature of the right that was given to the petitioner was transporting food and other articles belonging to the Corporation. Since the breach of contract is a breach qua contract, Article 14 has no application. In Radhakrishna (Supra), it was observed that "where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties arc governed by the terms of the contract and the petitioner complains about breach of such contract by the State, no writ or order can be issued under Article 226 of the Constitution". The remedy of the petitioner-firm for breach of contract is to file a suit for damages in the court of competent jurisdiction. 9. The question of promissory estoppel has been raised in paragraph-20 of the writ petition. All that the petitioners have stated are that they had deposited security money, executed surety bond and had made arrangement for executing the contract, in our opinion, these facts are not sufficient for which the principles of promissory estoppel should be made applicable to the Corporation. 10. All that the petitioners have stated are that they had deposited security money, executed surety bond and had made arrangement for executing the contract, in our opinion, these facts are not sufficient for which the principles of promissory estoppel should be made applicable to the Corporation. 10. In the result, there is no merit in the writ application and the same is dismissed; but In the facts and circumstances of the case, we shall make no order as to costs. Application dismissed.